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Last Updated : Sep 05, 2018 09:59 AM IST | Source: Moneycontrol.com

Will September belong to bears? Sensex gave negative returns during the month in 5 of last 10 years

The S&P BSE Sensex fell the most in the year 2008 (down 11 percent), followed by the year 2011 (down 2.1 percent) and it fell by nearly 2% each in the year 2016 and 2017.

Kshitij Anand @kshanand

The S&P BSE Sensex rose 1,000 points in August, and in 2018 so far, the index has already rallied by over 14 percent, or nearly 5,000 points.

The next crucial question for the investors is — will the momentum continue in September? Well, historical evidence suggests that bears took control of D-Street in 5 out of last 10 years.

The S&P BSE Sensex fell the most in September 2008 (down 11 percent), followed by the year 2011 (down 2.1 percent) and it fell by nearly 2% each in the year 2016 and 2017.

Close

The bulls managed to gain control on D-Street in the year 2009 and 2010 when the index rose above 10 percent each, followed by nearly 8 percent rally seen in the year 2012, and 2.6 percent gain in 2013.

1

Foreign institutional investors (FIIs) were net buyers of Indian equities in the last 6 out of 10 years. They were net sellers in the year 2008, 2010, 2014, and 2017.

On the other hand, mutual funds have pulled out money from Indian equity markets in the last 5 out of 10 years. They were net sellers in the year 2016, 2015, 2014, 2013, and 2012.

2

The outlook for September:

Indian market climbed the wall of worries in July and August to hit fresh record highs but muted global cues might cap upside for India markets going ahead, suggest experts.

Escalating fears of a trade war between the two biggest global economies — US and China — rise in crude oil prices and falling rupee are some of the factors which are likely to cap upside for Indian markets in September.

Apart from the above factors, the US Federal Reserve will hold its 2-day meeting this month beginning September 25. That will also act as a turning point for markets across the globe. Most experts feel that US Fed might raise rates again by 25 bps.

"Despite GDP showing good strength, the perils like rupee trading at record low against the dollar and high crude prices can have a huge bearing on the fiscal deficit which can eventually dent market sentiment. We believe markets may come under pressure due to sliding rupee and burgeoning fiscal deficit," Akash Jain, Vice President - Equity Research of Ajcon Global told Moneycontrol.

"We recommend a cautious approach. Going ahead, we believe, the progress of ongoing monsoon, rupee movement against the dollar, volatility in oil prices, trade war tensions and US Fed meeting on rate hike will keep domestic bourses volatile. We believe that the investors can have a stock-specific approach," he said.

The index hit historic highs in the month of August and most experts feel that the momentum is likely to continue in both Sensex and Nifty50, but it might not be as fierce as we saw since July.

With the psychological mark of 12,000 fast approaching, it is natural to doubt if August’s stellar gains will continue or not.

The index ended lower in two out of three days of last week. It may be treated as a sign of distribution, which usually happens on the approach of critical peaks.

The more time we spend below 11,700, there is a higher probability that bears will take control over D-Street in September.

"Directional moving indicators of Nifty have eased off, hinting at a loss of strength in the trend. This hints at either a consolidation period without much gains or a pullback. Weekly charts of Nifty show that momentum indicators like MACD and ROC are near resistance," Anand James, Chief Market Strategist at Geojit Financial Services.

"August Nifty rollovers were reasonably good, they were lesser than July expiry, which suggests that traders were not as optimistic about the uptrend by the end of August as they were by the end of July," he said.

James further added that if one can remain unscathed during such turbulence, monthly charts promise better times. “Patterns in monthly charts do not show much deal of exhaustion suggesting that the next leg of upside towards 13,000 would be sharper,” concludes James.

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First Published on Sep 5, 2018 09:47 am
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